ACRAA. Association of Credit Rating Agencies in Asia ASIA GUIDEBOOK. Regulatory Rating Requirements & Credit Rating Agencies in Asia

Transcription

1 ACRAA Association of Credit Rating Agencies in Asia ACRAA 15th Anniversary Publication ASIA Credit Rating GUIDEBOOK Regulatory Rating Requirements & Credit Rating Agencies in Asia Satoshi Nakagawa Grace Lee Publication Project Managers and Editors November 2016 THE 2016 NATIONAL BUDGET 1 1

2 2 2 BUDGET REFORM IN THE P-NOY ADMINISTRATION,

3 Asia Credit Rating Guidebook ASIA CREDIT RATING GUIDEBOOK 1

4 Publisher Association of Credit Rating Agencies in Asia Contact Office/Secretariat: 15/F Pryce Center, 1179 Chino Roces Avenue Makati City, Philippines Tel. (63-2) All Rights Reserved. Production: Santiago F. Dumlao, Jr., Secretary General Mildred F. Velayo, Executive Assistant 2 ASIA CREDIT RATING GUIDEBOOK

5 CONTENTS Vision / Objectives of ACRAA 5 Message from the Chairman 6 Foreword by the Secretary General 7 Summary Tables Regulatory Rating Requirements in Asia... 8 Credit Rating Agencies in Asia... 9 Historical Note 10 Regulatory Rating Requirements in Asia Bahrain Bangladesh India Indonesia Japan Kazakhstan Korea Malaysia Pakistan People s Republic of China Philippines Taiwan Thailand Turkey Profile of Credit Rating Agencies in Asia Bahrain Islamic International Rating Agency (IIRA) Bangladesh Credit Rating Agency of Bangladesh Limited (CRAB) Bangladesh Credit Rating Information & Services Limited (CRISL) Bangladesh Emerging Credit Rating Ltd. (ECRL) Bangladesh National Credit Ratings Ltd. (NCRL) India Brickwork Ratings India Pvt. Ltd. (Brickwork) India Credit Analysis and Research Limited (CARE Ratings) India CRISIL Limited (CRISIL) India ICRA Limited (ICRA) India SMERA Ratings Limited (SMERA) ASIA CREDIT RATING GUIDEBOOK 3

6 CONTENTS (continued) Profile of Credit Rating Agencies in Asia Indonesia PEFINDO Credit Rating Indonesia (PEFINDO) Japan Japan Credit Rating Agency, Ltd. (JCR) Kazakhstan Rating Agency of Regional Financial Center of Almaty City (RA RFCA) Korea Korea Ratings Corporation (KR) Korea NICE Investors Service Co., Ltd. (NICE) Malaysia Malaysian Rating Corporation Berhad (MARC) Malaysia RAM Rating Services Bhd (RAM Ratings) Pakistan JCR-VIS Credit Rating Co. Limited (JCR-VIS) Pakistan Pakistan Credit Rating Agency Limited (PACRA) P.R. China China Lianhe Credit Rating Co., Ltd. (LCR) P.R. China Dagong Global Credit Rating Co., Ltd. (Dagong) P.R. China Shanghai Far East Credit Rating Co., Ltd. (SFECR) P.R. China Shanghai Brilliance Credit Rating P.R. China & Investors Service Co., Ltd. (Shanghai Brilliance Rating) P.R. China Golden Credit Rating International Co. Ltd. (Golden Credit) Philippines Philippine Rating Services Corporation (PhilRatings) Taiwan Taiwan Rating Corp (TRC) Thailand TRIS Rating Co. Limited (TRIS Rating) Turkey JCR Eurasia Rating (JCR-ER) Thoughts from CRAs Selected Papers on Credit Ratings Business Models of CRAs The Debate Continues Green Bond Assessing Credit Risk In Infrastructure Securitization What Are The Characteristics Of Non-Traditional Securitization? ABBREVIATIONS ACRAA CAR CP CRA ECAI ESMA IOSCO NRSRO SEC Association of Credit Rating Agencies in Asia Capital Adequacy Ratio Commercial Paper Credit Rating Agency External Credit Assessment Institution European Securities and Markets Authority International Organization of Securities Commissions Nationally Recognized Statistical Rating Organization Securities and Exchange Commission 4 ASIA CREDIT RATING GUIDEBOOK

7 THE VISION Is for ACRAA to become an Asian regional institution of influence in enforcing the highest standards of credit rating discipline, providing the framework of cooperation for an effective infrastructure of investment information that promotes both local and regional investment flows, particularly through the Asian bond market. OBJECTIVES OF ACRAA (a) (b) (c) To develop and maintain cooperative efforts that promote interaction and exchange of ideas, experiences, information, knowledge and skills among credit rating agencies in Asia and that would enhance their capabilities and their role of providing reliable market information. To undertake activities aimed at promoting the adoption of best practices and common standards that ensure high quality and comparability of credit ratings throughout the region, following the highest norms of ethics and professional conduct. To undertake activities aimed at promoting the development of Asia s bond markets and cross-border investment throughout the region ASIA CREDIT RATING GUIDEBOOK 5

8 Message from the Chairman It is with great pleasure that I congratulate all of ACRAA members, its patrons, and my colleagues from the rating industry in Asia, on completing 15 years of ACRAA. As one of the founding team members, I look back with great satisfaction at the path charted, recognize the dedication of many others who helped us along the way and acknowledge the support and guidance of ADB and JCRA. Over these years, ACRAA has matured as a self-sustaining association, serving its members in trainings, publications, inculcating self-discipline, and setting an example for rating agencies in other regions of the world. I would like to take this opportunity to introduce the latest publication of ACRAA, Asia Credit Rating Guidebook which would be a valuable reference guide to all market participants. It compiles the basic profile of each ACRAA member and the specifics of the regulatory framework in each member s home jurisdiction. I would specially like to thank Ms. Grace Lee and Mr. Satoshi Nakagawa for the immaculate layout of the guide, aiming to concisely provide all the relevant information. I believe the document will be very useful to members in countries where the rating culture and market framework need to further mature to promote the disciplined growth of ratings. This would also be a handy guide for regulators to refer to. I am grateful to all the members for providing this valuable information. ACRAA will endeavor to keep updating this guidebook regularly in the future. I would like to extend thanks to Mr. Santiago Dumlao, Jr., our Secretary General, who has been a cornerstone in the life of ACRAA and continues to serve it with dedication, keeping all of us together. Lastly, I wish ACRAA a long prosperous journey. Faheem Ahmad Chairman 6 ASIA CREDIT RATING GUIDEBOOK

9 FOREWORD by the secretary general Hail to ACRAA on its 15 th Anniversary celebration! As Secretary General since the organization was founded, I have been privileged to witness the growth in membership and the extent of cooperation. In the number and variety of topics covered by our training workshops, capacity-building of our member agencies has been progressively strengthened. And in our Best Practices Dialogues, issues of vital concern to the integrity and credibility of credit ratings have been productively discussed, among members and with our Regulators. Domestic Credit Rating Agencies (DCRAs) which comprise the ACRAA membership have come a long way since 15 years ago, establishing their presence in their respective areas of operation and, through ACRAA, creating an Asian regional network of credit information exchange. More than this exchange, however, is the conscious development and enforcement of high standards in the credit rating process and in the conduct of the rating business. But perhaps the greatest achievement of ACRAA is that we have discovered each other and have realized we can work together to enhance our domestic and regional capital markets through the credit rating platform. And we are really just beginning. This Guidebook, produced so meticulously by Satoshi Nakagawa and Grace Lee, is one beginning. Santiago F. Santi Dumlao, Jr. Secretary General, ACRAA ASIA CREDIT RATING GUIDEBOOK 7

10 Country Bond (Public) Regulatory Rating Requirements in Asia Bond (Private) Bank Loans Bahrain NO NO NO Others / Note Bangladesh YES YES YES YES: Equity Shares & Securitization Deals India YES 1/ NO YES 1/ Regulations for minimum rating categories exist for investment by insurance companies and pension funds YES: Deposit Taking Non-Banking Finance Companies, Asset Reconstruction Companies, LPG/SKO s Parallel Marketers Indonesia YES NO NO YES: Private Companies Foreign Currency Borrowing ( BB- or above) Japan NO NO NO YES: Listing at Tokyo Pro-Bond Market Kazakhstan NO NO NO Korea YES 2/ NO NO 2/ Multiple ratings YES: Commercial Paper (multiple ratings) Malaysia YES 3/ NO NO 3/ It has been announced that unrated bonds and sukuk will be fully tradable from January YES: Certain structured products Pakistan YES 4/ YES NO 5/ 4/ Minimum BBB- 5/ Incentivized by applying 125% risk weight for unrated loans. YES: Commercial Paper (with minimum rating level) YES: All banks, DFIs, Microfinance Banks, Underwriter, Modaraba, Non-banking finance companies, Insurance companies PR China YES NO NO YES: ABS (2 Ratings) Philippines YES NO NO YES: Commercial paper Taiwan NO 6/ NO 6/ NO Thailand YES NO NO Turkey NO NO NO Summary Table 6/ Issue rating is not mandatory any longer and it may use issuer s rating as a proxy. N.B. This table refers to the statutory rating requirements mandated by laws and regulations. In practice, however, ratings are often encouraged, advised and/or requested by investors. Please see each country s page for details. 8 ASIA CREDIT RATING GUIDEBOOK

11 Country CRA (Abbreviation) Credit Rating Agencies in Asia Est. Year HQ No. of Rated Entities 1/ Bahrain IIRA 2002 Bahrain 34 Bangladesh CRAB 2003 Dhaka URL CRISL 1995 Dhaka 10,610 ECRL 2009 Dhaka 6,055 NCRL 2010 Dhaka 2,518 India Brickwork 2007 Bangalore 9,500 CARE Ratings 1993 Mumbai 7,500 CRISIL 1987 Mumbai 20,800 ICRA 1991 Gurgaon 19,500 SMERA 2005 Mumbai 40, Indonesia PEFINDO 1993 Jakarta Japan JCR 1985 Tokyo Kazakhstan RA RFCA 2007 Almaty 34 Korea KIS 1985 Seoul n.a. KR 1983 Seoul NICE 1985 Seoul Malaysia MARC 1995 KL 2/ 64 RAM Ratings 1990 KL 2/ Pakistan JCR-VIS 1997 Karachi PACRA 1994 Lahore PR China LCR 2000 Beijing 1, Dagong 1994 Beijing n.a. SFECR 1988 Shanghai 17 Shanghai Brilliance Rating Summary Table 1992 Shanghai 1,110 Golden Credit 2005 Beijing Philippines PhilRatings 1985 Makati 48 Taiwan TRC 1997 Taipei portal/?lang=en Thailand TRIS Rating 1993 Bangkok Turkey JCR-ER 2007 Istanbul / As of the end of Ratings on financial products (e.g., ABS) are not included. 2/ Kuala Lumpur ASIA CREDIT RATING GUIDEBOOK 9

12 Historical Note How It All Started ACRAA... in the beginning The original idea of organizing a regional caucus of Asian credit rating agencies is attibutable to Ambassador Jeffrey Len-Song Koo, Founder and Chairman Emeritus of the Asian Bankers Association (ABA) and then Chairman and CEO of Chinatrust Commerical Bank, Taipei, China. Dr. Yung-san Lee, the ABA Chairman, had organized a workshop on Development Strategies for Asian CRAs: Issues and Challenges in Forming a Regional Caucus co-organized by Japan Credit Rating Agency (JCRA) whose then President, Mr. Fujioka, was the former ADB President. The workshop was held at the ADB Institute in Tokyo on March 30, 2001, hosted by its then Dean, Mr. Masaru Yoshitomi. For almost two years now, Amb. Jeffrey L.S. Koo said in his opening statement, the Asian Bankers Association has been working on ways to enhance the role of Asia s credit rating agencies... I hope that this meeting will be a first step toward greater cooperation among credit rating agencies in Asia and the ABA, under Chairman Lee s able leadership, in building up Asia s local bond markets. My colleagues in the Asian banking sector have a deep interest in the growth of domestic bond markets, and over the long term, in the emergence of a real Asian bond market, Amb. Koo emphasized. In the meantime, we are pushing for measures that will make cross-border investment in our region easier and more attractive. And here we think that credit rating agencies can play a key role in facilitating the evaluation of corporate risk across economies throughout Asia, especially through the harmonization of rating practices and continued upgrading of the quality of credit risk assessments. It was ABA that commissioned in 2000 a study focusing on the development of credit rating agencies in Asia, conducted by Dr. Yeah Kim Leng, CEO of RAM Consultancy Services Sdn. Bhd. of Malaysia. This study was the subject of the Tokyo workshop attended by representatives from 15 credit rating agencies from 8 countries, with a total of 31 participants. The countries represented were: India, Indonesia, Korea, Japan, Malaysia, Pakistan, Philippines and Taiwan. Of the original Tokyo convenors, two have remained active without interruption: Faheem Ahmad, President and CEO JCR-VIS Credit Rating Co. Ltd. of Pakistan; and Santiago F. Dumlao, Jr., then President of PhilRatings. 10 ASIA CREDIT RATING GUIDEBOOK

13 THE ACRAA BOARD OF DIRECTORS, Faheem Ahmad Chairman President and CEO JCR-VIS Credit Rating Co., Ltd. Karachi, Pakistan Satoshi Nakagawa Vice Chairman Special Representative for Asia Japan Credit Rating Agency Tokyo, Japan Desh Raj Dogra Director CEO and Managing Director Credit Analysis and Research Ltd. Mumbai, India (until Aug. 2016) Razlan Mohamed Director Chief Executive Officer Malaysian Rating Corporation Bhd. Kuala Lumpur, Malaysia Watana Tiranuchit Director President TRIS Rating Co., Ltd. Bangkok, Thailand. Grace Lee Director President and CEO Taiwan Ratings Corp. Taipei China Rafi Karagol Director Vice Chairman JCR Eurasia Istanbul, Turkey The Secretariat Santiago F. Dumlao, Jr. Secretary General mitz f. velayo Executive Assistant THE 2016 NATIONAL BUDGET 3 3

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